Indirect taxes must equal direct taxes: Expert -Governance Now

Indirect taxes must equal direct taxes: Expert

“With GST, the entire country is moving from production based tax system to a consumption based tax system”

Geetanjali Minhas | June 22, 2017 | Mumbai

#cooperative federalism #indirect taxes #direct taxes #GST

“Out of the total taxes collected in the country, 65% is collected as indirect taxes and only 35% are direct taxes. This ratio is completely opposite to the taxation in developed world . We need to fix this ratio and try to make it at least equal,” said Ajit Ranade, chief economist, Aditya Birla Group.

Speaking at the Observer Research Foundation, Ranade said that GST is a massive indirect tax. With GST, the entire country is moving from production based tax system to a consumption based tax system.

“It will avoid cascading of tax and interlink incentives as it will be online and in turn move up tax collection. It is the true spirit of cooperative federalism and has great potential to boost the country’s GDP or national income,” he said.

Explaining that direct taxes like income tax are proportional to income and inherently come out of a person’s income, he said indirect taxes are inherently regressive, unfair and unjust. The pinch of indirect tax is higher for relatively poor people, he added.

“Bringing about a reform in indirect taxation system is only half job done,” said Ranade.

He said that scaling down of 1800 indirect tax slabs to six - 0 percent, 5 percent, 12 percent, 18 percent, 28 percent and 43 percent was a huge progress. “According to me, it should have had only two 5 percent and 12 percent as originally suggested by the Kelkar committee.”

Ranade added that Rs 5 lakh crore are locked in tax disputes in India and a lower GST rate would have led to tax buoyancy. “The real punch in this tax reform will only come with a more comprehensive tax system,” he said.

Comments

Other News

Master sculptor recalls the making of the Shankaracharya statue

The Golden Chisel: The Story Behind the Making of Ram Lalla By Seethalakshmi S. and Rahul Nandan Rupa Publications, 168 pages, Rs 395

Mumbai’s missing affordable homes

Mumbai’s real estate market keeps growing, yet homeownership remains out of reach for much of its population. Three experts – urban researcher Hussain Indorewala, urban planner Vidyadhar Phatak and developer Kamlesh Thakur of NAREDCO Maharashtra, agree that simply constructing more apartments

Rubio denies US foreknowledge of Starlink restrictions in Ukraine

US secretary of state Marco Rubio has said he was unfamiliar with the Wall Street Journal report suggesting Elon Musk had decided to throttle Starlink services in Ukraine, but rejected claims that Washington had ordered the restrictions to pressure Kyiv. “There was no

Can AI change India’s breast cancer story?

Breast cancer has become a public-health challenge in India. The greatest opportunity is to find cancers earlier. Artificial intelligence (AI) is opening a new era in breast cancer detection. AI systems can analyse mammograms and other breast-imaging studies, identify subtle abnormalities and assist radi

Farm stability in the time of climate change

Indian agriculture is experiencing significant climate volatility, while the world economy seems to be in a highly volatile situation. Economic indices from various countries show that they need to recalibrate their strategies to withstand economic headwinds. In such a challenging situation, a country li

El Niño threatens India’s Rabi crops

India’s southwest monsoon ended with a 13% rainfall deficit in 2026, its weakest performance in a decade, raising concerns over agricultural production, water security and the upcoming rabi season. With El Niño expected to persist into early 2027, experts warn that declining soil moisture, dep